BIOGRAPHY OF JAMES G. COPLIT

James G. Coplit is a partner with the law firm of Grimes & Battersby,which is based in Stamford, Connecticut. Jim is an IP lawyer with aspecialization in licensing.

Jim has a B.S. degree (Mechanical Engineering) from Cornell University anda J.D. degree from the Boston University School of Law. Prior to joiningGrimes & Battersby, he had been associated with two small firms inBoston and a non-profit corporation in Connecticut.

Jim has authored numerous articles in the areas of licensing and IPprotection, and has presented several talks on this subjects to suchdiverse groups as the New Jersey Patent Law Association andMassachusetts Continuing Legal Education. He also contributes to theannual updates of several books, including the Law of Merchandise andCharacter Licensing, published by Clark Boardman, Multimedia andTechnology Licensing Agreements, pUblished by the West Group, and theLicensing Annual published by Aspen Law & Business.

JUN-05-2002 15:45 GR[MES & BRTTERSBY 203 34B 2720 P.02/21

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MERCHANDISING LICENSE AGREEMENT

TlilS AGREEMENT i~, effective as of [Date] by and between [Owner Name], a[Owner's .vtate ofincorporation] corporation with offices at [Owner Address] ("LICENSOR'1and [Licensee Name], a [Licensee's state ofincorporation.] corporation with offices at [LicenseeAddress] ("LlCE1'IlSEE").

WITNESSETH:

WHEREAS, LICENSOR is the sole and exclusive Owner of the Property or Propertiesidentified more fully in Schedule A attached hereto (the "Property");

WHEREAS, LICENSOR is the sole and cxclusive owner of the Trademark jdentifiedmore fblly in Schedule A attached hereto (the "Trademark'');

WHEREAS, LICENSOR has the power and authority to grant to LICENSEE the right,privilege and license to use, manufacture and sell those types ofproducts that incorporate or areotherwise based on the Property as identified in Schedule A attached hereto (the "LicensedProducts") and to use the Trademark.on or in associati011 with such Licensed Products;

WHEREAS, LICENSEE has represented that it has the ability to manufacture, marketand distribute the Licensed Products in the countries identified in Schedule A attached hereto(the "Territory") and to use the Trademark on or in association with the Licensed Products;

WHEREAS, LICENSEE desires to obtain from LICENSOR an exclusive license to use,manufacture, have manufactured and sell Licensed Products in the Territory and to use theTrademark on or in association with the Licensed Products; and

WHEREAS, both UCENSEE and LICENSOR are in agreement with respect to the termsand conditions upon which LICENSEE shall use, manufacture, have manufactured .and sellLioensed Products and use the Trademark;

NOW, THEREFORE, in consideration of the promises and agreements set forth herein,the parties, each intending to be legaJIy bound hereby, do promise and agree as follows.

1. License Grant ./A. LICENSOR bej:cby grants to LICENSEE, for the Term of this Agreement as

recited in Sohedule A attached hereto, the exclusive right and license to use, manufacture, havemanufaotured, sell, distribute and advertise the Licensed Products in the Territory. The licenseincludes, but is not limited to, a license under any and all patents and copyrights and anyapplications therefore which have been filed or may be flIed in the future with respect to theProperty. ltisunderstood and agreed that this license shall pertain only to the Licensed Productsand does not extend to any other product or service.

B. LICENSOR hereby grants to LICENSEE for· the Tewof this Agreement asrecited in Schedule A at(/ll;hed hereto, a royalty- free, exclusive license to use the Trademark on

JUN-05-2002 15: 45 GRIMES & BATTERSBY 203 348 2720 P.03?21

or in association with the Licensed Products in the Tenitory as well as on packaging,promotional and advertising material associated therewith.

C. LICENSEE may not grant any sublicenses to any third part.y without the priorexpress written consent ofthe LICENSOR, which consent may be withheld forany reason.

D. LICENSEE shall nol make or authorize any use, direct or indirect, ofthe LicensedProducts, like or similar, in any other country outside the Territory and will not knowingly sellthe Licensed Products to persons who intend or are likely to res"l1 them in any count.ry outsidethe Territory.

2. Term ofthe AgreementThis Agreement and the provisions hereof, except as otherwise provided, shall be in full

force and effect commencing on the date of execution by both parties and shall extend for aTeml as recited in Schedule A attached hereto (the "Term").

3. CompensationA. Inconsidoration for the licenses granted hereunder. LICENSEE agrees to pay to

LICENSOR, diliing the Tenn of this Agreement, a royalty in the amount recited in Schedule Aattached hereto (the "Royalty'') based on LICENSEE's Net Sales ofLicensed Products.

B. In the event that LICENSEE grants any previously approyqd sub-licenses for theuse of the Property in countries outside of the United States, LICENSEE shall pay LICENSOR[Sub- Licensing Percentage] PERCENT of the gross income received by LICENSEE from suchsub-licensees.

C. The Royalty owed LICENSOR shall be calculated on a quarterly calendar bllSis(the "Royalty Period"} and shall be payable no later than [number]([#]) days after thetermination of the preceding :full calendarquilrter, i.e., commencing on the first (1st) day ofJanuary, April, July and October with the exception of the [lIst and last calendar quarters whichmay be "short" depending upon the effective date of this Agreen1ent.

D. With each Royalty Payment, LICENSEE shall provide LICENSOR with a writtenroyalty statement ina form acceptable to LICENSOR. Such royalty statement shall be certifiedas accurate by II duly authorized officer of LICENSEE, reciting on a country- by-country basis,the stock number, item, units sold, description, quantity shipped, gross invoice, amount bUledcustomers. less· discounts. allowances, returns· and reportable sales for each· .licensed Product.Such statements shall be furnished to LXCENSOR whether or not any Licensed Products weresold during the Royalty Period. .

E. LICENSEE agrees to pay to LICENSOR II Guaranteed Minimum Royalty inaccordance with the terms ofSchedule A attached hereto (the "Guaranteed Mirlimum Royalty").AJ> recited in Schedule A, a portion of the Guaranteed Minimum Royalty for the first year shallbe payable as an Advance against royalties (the "Advance"). 'the actual royalty payments shall

>reflect the amount of all Guarar-teed Minimum Royalty payments including any Advances made.

JUI+-05-2002 15: 46 GRIMES & BATTERSBY 283 348 2720 P.04/21

F. "Net Sales" shall mean LICENSEE's gross sales (the gross invoice amount billedcustomers) of Licensed Products, less discounts and allowances actually slJown on the invoice(except cash discounts not deductible in the calculation of Royalty) and, further. less any bonafide returns (net of all returns actually made or allowed as supported by credit memorandaactually issued to the customers). No other costs incurred in the manufacturing. selling,advertisine, and distribution of the Licensed Products shall be dedLlcted nor shall any deductionbe allowed for any uncollectible accounts or allowanCes.

G. .... ARoYl1.lt~obligation shall aeCIlLe u.pon the sale of the Licensed Productsregardf6ss ofthe time of collection by LICENSEE. For purposes of this Agreeri:1ent, a LicensedProduct shall be considered "sold" upon the date when such Licensed Product is billed, invoiced,shipped, or paid for, whichever event OCCll1'll [ltSt.

H. If LICENSEE sells any Licensed Products to any party affiliated withLICENSEE, or in any way directly orinditectly related to or under the common control withLICENSEE, at a price less tluul the regular price charged to other parties, the Royalty payableLlCENSOR shall be computed. on the basis of the regular price charged to other patties.

I. The receipt or acceptance by LICENSOR of any royalty statement, or the receiptor acceptance of any royalty payment made, shall not prevent LICENSOR from subsequentlychallenging the validity or accuracy of such statement or payment.

J. Upon expiration or termination of this Agreement, aU RC}"'d.!ty obligations,.. ::..1....' __ ._•. 'Ullll"'d --""'"-" "" t"" ,.., ...,~_..... Uj'-'-"m ROllri1.y ''"·'1 b- 0..• ..••••.. "~ ..:,>"J.11wlU\.l1l1Jl;. WJ~ ~u P\1nlUIl~ f,}J. nQ \J'W1I~tLC\::lU j'lt 111i1JU ".itH !I ::lUw tl i:1Wtflt:lli1Lt:lU wlU

shall immediately become due and payable.

i.. K. LICENSEE's obligations for the payment of a Royalty and the Minimum Royalty:;hall survive expiration or termination of this Agreement and will continue for so long asLICENSEE continues to manufacture, sell or otherWise market th", Licensed Products.

L. All pa:yment~ dUG hcrGWlder shG11 be made in United Stats&: ow"Tsnoy OrS"wu on aUnited States bank, unless otherwise specified between tb", parties.

M. Late payments shall incur interest at the rate of [Percentage] PERCENT ([#]%).. per month from the date such payments were originally due.

4. AuditA. LICENSOR shall have the right, upon at [number) ([#]) days written notice and

no more than once per calendar year. to inspect LICENSEE's books and records and all otherdocuments and material in the possession of or under the .;ontro! of LICENSEE with respect tothe subject .matter of thi. Agreement at the place orpiace. where such record. are nonnallyretained byLICENSEE. LICENSOR shall have free and full access thereto for such purposesand shall be permitted to be able to make copies thereofand extraetstherefrom.

. B. 111 the event that such inspection reveals a discrepancy in the amount of Royaltyowed LICENSOR from what was actually .tImd, LICENSEE shall pay such discrepancy, plus

;;'-- • • ~ - ¥ - •

JUN-05-2002 15:46 GRIMES & BATTERSBY 203 348 2720 P.05/21

mlerest, calculated at the rate of [Percentage] PERCENT ([#] %) per month. In the event thatsuch discrepancy is in e)(cess of [Dollar Amount] UNITED STATES DOLLARS ($ [#)LICENSEE shall also reimburse LICENSOR fur the, cost of such inspection, including anyattorney's fees incurred in connection therewith.

C.A1i books and records relative ,to LICENSEE's obligations llereunder s'hall ,bemaintained m1d kept accessible and available to LICENSOR for inspection .for at least [number]([#]) years after termination of this Agreement.

D. ", In thc eVCllt that an investigation of LICENSEE's books .arid records is,made,certain confidential and proprietary business infonnalion of LrCENSEE may necessarily bemade available to the person or persons conducting such investigation. It is agreed thatsllchconfidential and proprietary business hlformation shall be retained in confidence by LICENSORand shall not be used by LICENSOR or disclosed to any third party for a period of[number]([#) years from the date of disclosUre. or 'Without the prior express writtenperrnissjon ofLICENSEE unless required by law, It is understood arid agreed, however, that such, iufonnationmay be used in any proceeding basel! .on LICENSEE's. failure to, pay its actual Royllltyobligation.

~. Warranties and ObUgations .'. ' '..A. LICENSOR represents and warrants that it has the right and power to grant tile

licenses granted herein and that there are no other agreements with any other party in conflictherewith.

B. LICENSOR further represents and warrants that the Property and/or Trademark'do not infringe any valid right ofany third party.

C. LI<:::ENSEE representslllld 'Warrants that itwill use its )Jest efforts to promote,market, sell and distribute the Licensed Products.

D. LICENSEE shall b(lsolely responsible for the manufacture, production, sale >U)ddistribution ofthe licensed Products llIld will bear all related costs associated therewith.

E. It is the intention of the parties that LICENSEE shall introdllCe the LicensedProducts in all countries in the Territory 011 ot before tlle Product Introduction Date recited inSche@le A and commence shipment of Licensed Products in all countries in the Territory on orbefore the Initial Shipment Date recited in Schedule A. Failure 10 meet either the ProductIntroduction Date Or the Initial Shipment Date shall constitute grounds for immediate terminationof this Agreement by LICENSOR.

6. Notices, Quality Control and SamplesA. The Licenses granted hereunder are conditioned upon LICENSEE's' full and

complete complillllcewith the marking provtsionsofthe Trademark, patent and copyrightlawsof the United States and othcr couutries in the Territory. .

JUI-r05-2002 .15' 47 GR[ME5 & BATTERSBY

B. The Licensed Products, as well as all promotional, packaging and advertisingmaterial relative thereto, shall include all appropriate legal notices as required by LICENSOR.

C. The Licensed Products shall be of a high quality which is at least equal tocOnq:larable products manufactured and marketed by LICENSEE end in .conformity with astandard sample approved by LICENSOR.

D. If the quality oh class of the Licenscd Products falls below such a production-runquality, as previously approved by LICENSOR, LICb'NSEE shall use its best efforts to restoresuch quality. In the event that LICENSEE has not taken appropriate steps to restore such qualitywithin [numb~r] ([#]) days after notification by LICENSOR, LICENSOR shall have the right toterminate this Agreement.

E. Prior to the commencement of manufacture and sale of the Licensed Products,.LI~BNSBBshall submit to LICENSOR, at no cost to LICENSOR and for approval as to quality,[number] ([#]) sets of samples of all Licensed Products which LICENSEE intendstomanufacture and sell and [number] ([#]) oomplotoset of illlprolliuuanal aiidadvertisir.g rriatel'ialassociated therewith. Failure of LTCENSOR to approve suchsamplcs within [number] ([#])working days after receipt hereofwill be deemed approval. (fLICENSOR should disapprove anysample, it shall provide specific reasons for such disapproval. Once such samples have beenappr{)ved by LICENSOR,. LICENSEE shall not materially depart t."'aerefrom withoutLICENSOR'~ ~rlor (ll<:prl!!jjS written consent, which shall not be unreasonably withheld.

F. At least once during each calendar year, LICENSEE shall submit to LICENSOR,tor approval, an additional [number] ([#]) sets ofsamples.

G. 'The LICENSEE agrees to pennit LICENSOR or its representative to inspect thefacilities where the Licensed PrOd,lCts are being manufactured and packaged..

7. Notieesnd PaymentA. Any notice required to be given pursuant to this Agreement shall be in writing atld

delivered personally to the other designated party at the above-stated address or mailed bycertified or registered mail, return receipt requested or d~li'vered by a recognized nationalovernight courier service. "

:S. Bither party may c1111nge the address to which notice or payment is to be sent bywritten notice to the other in accordance with the provisions of this paragraph.

8.. IntellectUal Property ProtectionA. LICENSOR shall seek, obtain and, during the Term of this Agreement, maintain

in its own name and at its own expense, appropriate intellectual property protection for the·Property and Trademark.

B. In the event that LICENSEE requests that LICENSOR obtain intellectual propertyprotection for e particular item or in/a particular country where LICENSOR had not, heretofore,obtained such plUtcetion, LICENSOR agrees to take reasonable steps to obtain such protection,

JUN-~5-20~2 15'47 GRIMES & BRTTERSBY 2~3 348 272~ P.07/21

provided, however, that LICENSEE ~hall be obligated to reimbuIlIe.LlCENSOR for the cost offiling, prosecuting and maintaining same.

C. It iSlmderstoodand agreed that LICENSOR shall retain all right, title and interestin the originalProperty as well as in any modifications or improvements made to the Properly byLICENSEE.

D. The parties agree to execute any documents reasonablyreq\lested by the otherparty to effect any of the above. provisions.

E. . LICENSEE acknowledges LICENSOR's cxclusive rights in the Property and,further, acknowledges that the Property and/or the TrademaTk aTe unique and original toLICENSOR and that LICENSOR is the owneT therecf. LICENSEE shall not, at any time duringor after the effective Tern! of the Agreement, dispute or contest, directly or indirectly,LICENSOR's exclusive right and title to the Property and/or the .Trademark orthcvali\iitythereof. LICENSOR, however, makes no representation or warranty with respect to the valid.ityofany patent, lradernarkorcopyright which may issu~ or be grantedthereftO;m.

F. LICENSEE acknowledges that the Property and/or the Trademark hav~ acqUiredsecondary meaning.

G. LICENSEE agrees that its use of the Property and/or the Trademarkinuresto thebenefit ofLICENSOR and that lhe LICENSEE shall not acquire any rights in the Property and/orthe Trademark.

9. TerminationThe following~mination rights are in addition to the. termination rights provided

elsewhere in the Agreeollleont:

A. I,nmediate Right of Termination. LICENSOR shall have the right to immediatelyterminate !his Agreemeont by giving ,written I1Qtice to LICENSEE in the eveont that LICENSEEdoes any of the following:

i. fails to meet the Product Introduction Date or the Initial Sl1ipmellt Date asspeeified in Schedule A; or

ii. after. having Qommenced sale of the Licensed Products, fails to continuously gellLicensed Products for [number] ([#])consecutive Royalty Periods; 01'

iii; fails to obtajn or main.tain product liability .insurance in the amount and of thetype providedfor herein; or

iv. files a petition in bankruptcy or is adjudicated a bankruptor insolvent, Or makesan assignment for the .benefit of creditors, or an arrangement pursuant to anybanlnuptcy law, or if the LICENSEE discontinues its business or a receiver is

JUN-05-2G02 15:47 GRIMES & BATTERSBY 203 348 2720 P.0B/21

appointed for the LICENSEE or for the LICENSEE'S business and such receiveris not discharged within [numbe1'] ([Ii]) days; or

v. breaches any of the provisions of this Agreement relating to the unauthorizedllllsertion ofrights in the Property and/or the Trademark; or

VI. fail5, after receipt ofwritten notice from LICENSOR, to immediately discontinuethe distribution or sale of the Licensed Products or the use OfallY packaging orprom.otional material which docs not contain the requisite leea)Je~ends; or

Vll. f!li,15 to 11lllk~ timl'ly Plly:\IlIi'IlJ QfRoYllln~5 wh~n dllli' twQ or mor~ times during anytwe;lve-month p~rio(L

B. !II'.mediateRight to Terminate a Portion. LICENSOR shall have the right toimmediately terminate the portiones) of the Agreement relating to any Property and/or LicensedProduct(s) and/or for any country in the Territory if LICENSEE, for any reason, fails to meet theProduct Introduction Dates or thelnitial Shipment Dates $pecified in Schedule A or, after thecommencement ofmanufacture and sale of a particular Lillensed Prod.uct in a particular country,ceascs to sell commercial quantities of such Licensed Product in SUllh country for [number] ([#])consecutive Royalty Periods.

... . C. Right to Terminate on Notice. TIlls Agreement may be terminated by either party'uI1On [number] ([#]) days \Vlitten notice to tbe otberparly in the event of a breach of II material

provision of this Agreement by the other party, provided that, during the [number] ([#]) daysperiod., the breaching party fails to cure such breach.

D. .LICENSEE shall have the right to. terminate this Agreement at any time on[number] ([#]) days written notice to LICENSOR. In such event, all moneys paid to LICENSOR

.·Shallbe deemed non-refuridableandUCENSEE's obligaticiritopllY anygllllra.llteed moneYs,including the Guaranteed Minimum Royalty, shall be accelerated and any yet unpaid guaranteedmoneys shall become Immediately due and payable.

10. Post l'erminatioll RightsA. Not less than [number] ([#]) days prior to the expiration of this Agreement or

immediately upon termination thereof, LiCENSEE shall provide LiCENSOR wiih. a completeschedule ofall inventory ofLicensed Products then on-hand (the "Inventory");

B. Upon expiration or termination of this Agreement, except for reason of a breachof LIGENSEE's duty to comply with the quality co1!tTol or legal notice Marking requirements,I..ICENSE~ shall be entitled, for an additional period of [number] ([#]) monlhsand on a non­eX91llsive basis, to continue to sell such Inventory. Such sales shalt be made subject t" all of theprovisions of this Agreement and to an accounting. for and the payment of a Royalty thereon.Such accounting and payment shall be due and paid within [number] ([#]) days after the close ofthe said [nu~ber]. ([#]) month period. .

,JUJ+-6S-2062 lS'48 GRIMES & BATTERSBY 203 348 2720 P.09/21

C. Upon the expiration. or I""",ination of this All1"ement, all of the rights ofLICENSEE under this Agreement shall forthwith. terminate and immediately revert 10LICENSOR and LICENSEE shall immediately discontinue all use of the Property and the like,at no cost whatsoever to LICENSOR.

D. Upon termination of this Agreement for any reason whatsoever, LICENSEEaweesto immediately retumto LlCENSqR all material relati~ to the ProJl9rty including, butnot limited to, all artwork, color separations, protot)lpes and the like, as well as any marketstudies or other tests or studies conducted by LIc;ENSEEwith respect to the:property, at no costwhatsoever to LICENSOR. '

11. Good WillLICENSEE recognizes the value of the good will associated with the Property and

aclaJ0wledges ~hat the Property and all rights therein including the good will pertaining thereto.belong exclusively ~o LICENSOR.

12. IDrringementsA. '. LICENSEE shall have the.. right, in its discretion•.• tp .institute and prosecute

lawsuits against third persons for infringement of the rights liPCTISed in this Agreement.

B. If LICENsEE does not institute an infringement suit within [numberj ([#j) daysafter LICENSOR's written request that it do so, LICENSORmay institu(eand prosecute suchlawsuit. Any lawsuit shall be prosecuted solely at the. cost and expense of the party bripging suitand all sums recovered in any sUQhlawsuits' whether by judgmept. settlement or otherwise, inexcess of the amount of reasonable attorneys' f",es and other outofl'ocketexpe"ses ofaucn suit,shall be divided equally between the parties. .

, ,.... <-'.

C; Upon. reqJlest of the. party bringil1€< the Jawsuit, the other PllrtYshall ex~cute allpapers, tcstifyon all matters, and otherwisc oooperate in eyCfY way neo0sslIrYlIlld..desirable forthe prosecution of any such lawsuit. The. party bringing suit..shall rei.mpurse the otherparty}orthe expenses incurred as a result ofsuch cooperation. .

13, IndemnityA. LICENSEE agrees to dcfend and indemnifyUCENSOR,its officers, directors,

agepts and employees. against all costs. expenses.and losses (including reasonable attorneys' feesand costs) incurred through ClainlS of third parties against LICENSOR bas.ed on the manufactureor sale of the Licensed Products including, but not limited to, actions fO!.lnded on productliability.

B. LICEN$OR agrees. to defel1d and indemnify LICENSEE, *.officers, directors,ag~ts and employees, against~l costs,elCpensesand losses (including reasonable .a,~<>fneys· feesand costs) incurred. through claims of .third pa1'ties against LICENSEE,challenging theauthenticity of the originaIly s\lbmitted Property;. provided however, that such indemnity shallonly be applicable in the event of a final decisiou by acour! of competent jurilidiction fromwhich no appeal of right exists and shall be limited up to the amount of the actual moneys

GR[MES & BATTERSBY 203348 2720 P,10/21

:t'el;eived by LICENSOR under this Agreemeut. Further, this indemnity does not .cover anymodifications or changes made to the Property by LICENSEE.

14. InsuranceLICENSEE shall, throughout the Term ofthe Agreement, obtain and maintain at its OWll

cost and expense from a qualified insurance company licensed to do business in [Slale], standardProduct Liability Insurance naming LICENSOR as an additional named insured. Such policyshall provide protection against any and all claims, demands and callses ofaction arising-outofany defects or failure to perform, alle~ed or otherwise, of the Licensed Products. OT!lJlYmaterialused in connectiontherowiili or any useiliercot: The amount of coverage shall be" asspeeified inSchedule A attached hereto, nle policyllhallprovide fOT· [,zumbeF] ((#]) days notice toLICENSOR from the insllrer by Registered or Certifilld Maii, return receipt requested, in theevent of any modification, cancellation or termination thereof: LICENSEE agrees<to furnishLICENSOR a certificate· of insurance evidencing same within [nwnber] .([#]) •days afterexecution of this Agreezuent and. in no event, shall LICENSEE manufacture, distrilmteorsellthe Uconscd Products prior to :t'el;eipt by LICENSOR ofsuchevidencCl of iDJ>llrance.

15. Force MajeureIt is understood and agreed that in the event of an act of the government, or war

conditions, or fire, flood or labor trouble in the factory of LICENSEE or in the factory of tll05emanufacturing parts necessary for the manufacture of the Licensed Products, which prevents theperformance by LICENSEE of thc provisions of this Agreement, then 'such nonperformance byLICENSEE shall not be considered as grounds for breach of this Agreement and suchnonjjenollJlanee shalL be excused while the conditions herein prevail and for [numbeF] ([#])months thereafter.

16. Jurisdiction and Disputes,A. This Agreement shall be governed. in a~rdancewith the laws of the State of

[Stale].

B. All disputes under this Agreement shall be resolved by the couTts of the Stale of[Stale] including the United States District Court for the [District] and the partics all consent tothe jurisOiction of such courts, agree to accept service ofprocess by mail, and hereby waive anyjurisdictional or venue defenses otherwise avaiiable to it.

17. A2reement Binding on SuccessonThe provisions of the Agreement shall be binding upon and shall inure to the benefit of

the parties hereto, their heirs, administratOT$, successors and assigns.

HI. WaiverNo waiver by either party of any default shall be d"mneU as a waiver of prior or

SUbsequent default ofthe samB or other provisions ofthls Agreement.

19. SeverabilityIf any term, claUS':' or f/rovision hereof Is held Invalid or unenforceable by a court of

.• .• •• .~. -_. ., •• .".. 1

(lompet;nt JU1i~10U,m,~lWh1n.vGl101t"i&b.::.U net ~~ct th€ v:illdity. or cpen:m::m ar.iU1Y otn.cr term.

JUN-05=2002 15:48 GRIMES &B~TTERSBY 2033482720 P.l1/21

clause ,'or provision and ,such inva.1idtcrm, clause orprovisicn-shalLbe,deemcd to, be severed.from the Agreement.

No Joint Ventiln~Nolhingcontained herein shall constitute this lUTllngementtobe employment, II joint

venture 9U partnership.

21. AssignabilityThe license grantedhereunder is personal to LICENSEE and shall not be assigned by any

actor LICENSEE or by operation of law unless in connection with a transfer of substantially allof the assets ofLICENSEE orwith the consentofUCENSOR.

22. IntegrationThis Agreement .constitutes the entireunderstaT)dingof thep;l!ties. and revokes and

supersedes all prior agreements betweem the parties, including any option agreements which mayhave been entered hilo between the parties. and is intended as a: final llxpression of theirAgreement. It shall not be modified or arnllndlld flXCept in writing signed by the parties hlll'etoand specifically referring to this Agreement. This Agreement shall take precedence over. anyother documents',Vhich may be in conflict with said AgreeJIlent.

IN WITNESS WHEREOF, the parties hereto, intending to be legally boundbereby, haveeach caused lobe llffi)(edhereto itsorhislher hand and seal thll day indicated.

[Owner:J'lame)

By: _

Title:, ~ ~_~-'-...-...- ......_-'

Date: ----------__-

By:

Titie: _

Date:----------

JUN-1il5-201il2 15:49 GR[MES & BATTERSBY

SCHEDOl.EATO MERCHANDISE UCENSE AGREEMENT

DATED (Date]XlETWEEN

•.....~'n~· ""Il- n 'lU'Pr 'f$"n "41~.I

AND[Licensee Name\

2633482720 P.12/21

1. Licensed PropertiesThe following L.icensed Properties fonn part oftbis Agreement:

[Pmpeny]

::. Licensed TrademarksThe following Licensed Trademarks funn part: of this Agreement:

[Trademllr.b]

3. Licensed ProductsThe following Licensed Products form part: of this Agreement:

[Licens",d Products]

4. TerritoryThe following countries shall constitute the Territory:

[Territory]

·S.··---TermTbis Agreement shall commence on the date executed by both parties and shall extend for

an-initial Term of:

[Jnitial Term] YEARS

UCENSOR bereb)' grants LICENSEE [Number of Optl01lll] separately exercisableoptioiiS (the "Option.") to reneW this Agreement for additional [Option Term] year extendedTerms on the same tenus and conditions provided for herein, provided:

(a) LICENSEE provides written notice of its intention to exercise this Opnon within[number] ([#]) days prior to expiration ofthe then in-effect Tenn; ilml

(b) LICENSEE shall have paid LICENSOR total royalty income of at least [OptionMinimum] ;;!;,u:lng the then in.effect Term.

6. Ro~ld~ RateT 'f"'r;ol\"c:1.'RJ:: t!'h'31l 'I"'l!ol" t'h f'nllnmnu mv~ltv1"Htt"'"J...U."'-".....J. ... IJ'Iool'~ QUUoL.Io "''''''J' ..,...........r ..."·::;. ..,"'J ....~J .....io_.

[RojjtifW Rate].

JUN-05-2002 15'49 GRIMES &BATTERSBY 203348 2720 P.13/21

7. Guaranteed Minimum Royalty lIDd AdvanceLICENSEE agrees to pay LICENSOR an AdVllfice of [Advance] upon execution of this

Agreement.

LICENSEE agrees to and will pay LICENSOR a GlllJIanteed Minimum Royalty of[Minimum Royalty] for each calendar year during the Tellll ofthis Agreement.

8. Prodllct Liability Insurance[PL InsuratlCe] [$ J combined single limit, with a deductible amo~mt not to exceed

[Dollar Amount] UNITED STATES DOLLARS ($[#]), for e-achsingle occurrence for bodilyinjUIY and/or for property damage.

9. Product IntroductioolInitial ShipmentThe Product Introduction Date for all Licensed Produ~ts in all co.untrics in the Territory

shall be [Introduction Date].

The Initial Shipment Date for all Licensed Products in all countries in the Tetritory shallbe [ShiP Date]. .

JUN-05-2002 15:49 GRIMES & BATTERSBY 20334B 2720 P.14/21

CHECKLIST: DRAFTING MERCHANDISING LICENSEAGREEMENTS

• Identification ofPatties• Names• Addresses

+ Definition ofProperty+ Definition ofLi~idProducts

• Fragmentation issues if exclusive+ License Grant

• Exclusive vs. nonexclusive• Definition oftenitoxy• Reservation ofrights• Entertaimnent and merchandising rights• Sublicensing

+ Term ofAgreement• Options to renew• Effect ofcommercialization ofproperty

+ Compensation• Royalty income• Sublicensing income division• Royalty period deimed• Net sales defined• Royalty statements• Advance• Guaranteed minimum royalty

-- Guaranteed VB. non-guaranteed• When sale occurs• Sales to affiliates• Receipt will not prevent subsequsn! chaJlenge• Acceleration• Survival oftermination• Currency• Interest

• Audit• Timing and notice• Underpayment• Reoord retention

JUN-05-200.2· 15:49 GRIMES & BATTERSBY 203348 2720 P.15/21

• Representations and Warranties• Ownership and Non-infringement• Nece~~ary permissions• Ability to contract• No conflicting agreements• Best efforts to commercialize• Promote and advertise• Product introduction and first shipIIleIlt dates

• Quality Control and Samples• Marking.provisions ofintellectual property laws• Obligation to seek intellectual property protection• Legal notices• Quality standards• Product approvai,,/types and frequency

Preliminary artworkFinal artwQTkPreproduction samplesProduction samplesPeriodically during production

Right to ternUnatOl if<luality falls• Intellectual Property Rights

• Acknowledgment ofownership• Licellsee estoppel• Goodwill• Secondary meaning acknowledgmOlnt• Execution of documents

• Termination• Immediate right to tllTTllinate

Product introduction datesFails to continuously sellFail to maintain insurallceBanlauptcy or dissolutionUnauthorized u"e ofmamsTimely payment ofroyalties

• Right to terminate portion of agreement• Right to terminate on notice for breach

• Post-Termination Rights• Inventory• Sell-offperiod• Cellie selling• Return ofmaterial

JUN-05..,2002 15:50 GRIMES & BATTERSBY 203348 2720 P.16/21

• Jnfrin~ents• party with initial rightJsecondary tight• Cooperation• Responsibilityfor paymCJlt• RCllPOnsibilitY for ie~ c01.lllsei• Oiyision ofpl'Qceeds

• Goodwill

• lndenllii.fica.tion• Product liability

iJ• Infringement

• Insurance• Product liability• Advcrnser's

• Force MlIicure

• Jurisdiction and Disputes

• Notice Provision

• Nondisclosure and Noncompete

• Termination• On notice in event ofbreach.._~- • By agent

• Binding on Successors

• Wiliver

• Independent Contractor

• Severability

• Assignability

• Integration·

• Execution and Dflting by Parties

MERCHANDISING AND.... .CHAIRACTER lICENSING

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JamesGrimes&B

Stamford,

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IntrodIUction toM~.rchandising

(' "Merchandising" Defined ',-- "The Licensing of a recognizable tr:

copyri.ght fOI use OU ancillary or colla!produoCts or services'.,

r The Smllce ofMerchandising Properties.- ChllIacter & Entertainment

- Sport.. & Collegiate

- Celeb"ily& DesiJ!l1Cl'- COI]Jo'late & Events

--

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Overview

(' fntroductioo to Merchandisiifg.,.,.(' Pmtecting Merchandising Pro~it;

too Intellectual Property Laws(' The: Art ofNegotiation(' The: Mm:handis:ing License Agreement

-- .t\", Overview

- lmportant Provisions in the Agreement

r Ex:tent of International I;,,icensing(' Th~,F'utuleofLicensing

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Introduction t{i"M~rc:handising'.,~ ...,...

r Types (}f Ucensled Products "9ls.,....w....(' Stille of1he Indulslry 25 Years Ago'

-Disoey

- WUner Bros- P'amnmml Pictlires

-~·.w Olhers . ::r LIMA's 2001HaJ:Vard1Yale ~urvll)l

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IntrOduction to M~rchandising. .,.'......~

• Corporate Lk.ensing, the fast~~t~wiJse~ent of the licensing industrY'-,

• Leaders:"':"'.Coca-Cola

- Harley Davidson- Cbrysler Ca.rporatioo-M&MiMaJs

- Pillsbury

Protection ofPropertiesr Cop)'lightProoriion

- Applicable for Art and Charact,

-hlexpensive ...dImmediate- Finite Duration hrespective ofUse

r Trademark Protection- Applicable for Names and CbaracteIS- Immediate and Relatively Inexpeosi,...

- Infmite Dm:-.rtion \'lith Use

r Right ofpublir.ity-S_bvState

Protection of properties....,~,.-':.-,.

r Search Considerations ""'i-(_,_

- Ali-Cia.. Merchandising Sea",bes'~~'0,....~:<

- Consider Other Established Usesr Yale for locksr HamlJd for software

(" Intent to Use Trademark Applications- Merchandising Classes, e.g 9, 16, 2.5,2.8

- Protect Befute You Publicize,

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The Art ofNegotiation'"

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r Know Your Property- Be Aware of 115 Strength, & We.

-Know the ColIl'etilion

r Know Your Adversary-Investigate, Inve,tigate, Inve,tigate

(" Be Humble

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The Me,rc:hahdfi~ing Agreement". ~

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IndenmfficatiO'D_ Pro-visiot:lll- Product Lillbifily by ILicensoo

- Infringement [by Licensor

Warranties- PowerloEntei IntoJ\gref.neItI- Noo-lnfrin;!l\lllleollEle.st ofKnowledge & Belief

InsUJllllCe, P1:o\li.sions- Prod.cl LiElbi:liJL)'

- Advertifo"",,-. Endorsement.

The Merc:handising Agreementr Type ""'"

- Uce~s:e1JS. j~ssi8t'~l\t_. F.J::c"EtiSt\'e VS-. Non~EKcluSive

r Basac TertIIS.. Compensali<", (RoyaL<)i Rat,s, FOB, Split)- "Net Sales-AdvBl.1.C~

-- Guaranteed 'J5. Non-Guamteed Minimum.. Ro)'llltYP,rio"" [quart,rly, yearly, monthly)-- Term ofAgreement_. Licensed TerToorj

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ThE~ Merchandising Agreement-,

Dis'putes and. Governing Liiw"~ /\rmtmli<m v.,·Liligation -~_=- 'Value--State Law

Audit ami Document Retention Provision:- 1fime, Location, Coopenrticn & P"}'lI<nt_. Hecords-Type, LoClllion, Period

Inl<ll~ctual Property Rights- He5Jlllnsit>ility

_ -. l'.nfureememt Against Infringe..

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The MerchandisiQgAgreement'~:

Identification ofIicensed Pfut"- TradelDllIi<s &< a..u-aetecName.

Idelltificationl)flicenSed Products- EKcl..:ive Lirenses--Fragnulrttation Issues

• Term and. T,;rritOl).- Fixed r,emlS; aptions to Ftenew- Worldwide' vs. futerID!lati"

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The Merchandising Agreement;:H.'''- .

Royalty Rates and Mi~''''"",- Domestic "s. FOB Royalty R~le ~iJ}~,._ Split Royalty Situation -yC

-Minimum vs. Guarantee

Quality Control Provisiol1~

- Multiple Approvals ofP",d"cfslPackaginglAd,ertising

- Recoutse for Failure to Comply

The Merchand.i~ing Agreementr I,icen.or \Vish List

- Re.taiD ell rights or agroee upon cquit~skriae- Gel licenilee to commit103 gblll"UlIteed ~~~IJU"OY.a1ty- Ot:( Irighc5t myalty Be aDd. ad\'allCe as pl).sSilr~."- Protect againit domestic: Slmlicensi'ag "- Prdcct agaiffit FOBsales- Limil reps and ""'"mandes to"bestcfbIDwlcdlgc &.

- Cap liiLbilit)<.- ii~ inJemnity.o r:cps and ....'aJlaT)ltts

. MustheflMl Judgmmt, Cup em inoome reteived

- Bwlli nulesl:ones iIO trigger te:m1inatiolL {i.e. P'fOl:ructIntroduction Oak;. FirstSlUpmcat Date or CtilsOO. sales}

- Deal om)' wid\ a :reuptableccmpny

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- Eastern Europe-Other

Scope of International, Lic;ensing...........~

r Sales of licensed products by c~- Uniled States/Canada 65:

- Western Europe- Japan- Aust,alialNew Zealand- So.lCentral America- Southeast Asia

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Termination Provisions ••~, .. -, .~,.,.

- Tennination on Notice for Bn:a~h WI

Cure- imml:diate Rigbt to Terminate

c' Rep<IllOd Failu,elo PayRoyalties(" Failure tDMaintain mliUlaB::e

r Failu,e toMeet Pr<>du<tln,lroduction&.FirstShipment Dates

The Mercha~disir1gAgreemel'lt

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Current Roya!~y RatesR;;n~, .. Median

C' EntertaimnentlOiaracter: .:&.20%"ui;~,J0%

r CbrpotateBra1lds: 41:"12%

r .Alt 3~-15%

C' Designer & Fashioll 4-10%

r Coleges & Events ')'·9%

rpr-ofessional SPorts 1-12%r Nt:m-Profit ~~-12%

The Future'ofJ_ijcensing.. .. .... ",.

r Dis1lJIbirli Trends: '-~,...""..,Ro)<dtl'Rat.s APJ>IOaclring 20%- Ucensees Offering Equity plu s Royalties

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- lDcreaSedcse oftransferfees

~&efu!a11OgrJllloptions to reneW..... (h.vn<:rsmp issues for licensee: d.eve1oped materi~.. Inflexibility In prnduttsubmi,:sions.., E!<lIaard;naiilybigb guorant."s paid as advance,

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